Carbon Power Politics

The next EPA chief and next phase of the Obama green agenda.

Updated March 6, 2013 12:01 a.m. ET

President Obama gave his second-term global warming agenda a lot more definition Monday with a new Environmental Protection Agency chief to replace Lisa Jackson. Picking Gina McCarthy, one of her top lieutenants and the architect of some of the agency's most destructive carbon rules, is a sign he intends to make good on his vow of "executive actions" if Congress doesn't pass cap and tax.

Over the last four years running the EPA's air office, Ms. McCarthy has been a notably willful regulator, even for this Administration. Her promotion is another way of saying that Mr. Obama has given up getting Congress to agree to his anticarbon agenda, especially given the number of Senate Democrats from coal or oil states. The real climate fight now is over the shape of forthcoming rules that could be released as early as this summer, and a brutal under-the-table lobbying campaign is now underway.

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The main target, as usual, is the U.S. power industry, which accounts for 40% of U.S. carbon emissions and about one-third of greenhouse gasses. Last year Ms. Jackson and Ms. McCarthy imposed a moratorium on new coal-fired plants, plus other rules that are forcing utilities to shut down older plants and invest billions of dollars to upgrade everything else. The agency is about to go after the leftovers.

The moratorium is known as "new source performance standards," which the EPA issued because it declared carbon a dangerous pollutant under the clean-air laws of the 1970s. These standards say that all future power plants running on fossil fuels—coal or gas—must not emit more than 1,000 pounds of carbon dioxide per megawatt-hour.

Even the most modern, efficient coal boiler emits 1,800 pounds, while combined cycle natural gas turbines come in barely under that threshold. To adapt what Henry Ford said about the color of the Model T, utilities can build any plant they like as long as it runs on natural gas.

This being Washington, new source standards also apply to old sources. But when the EPA issued the diktat last March, it claimed it lacked sufficient information to impose them on existing power plants and heavy manufacturers, refineries and the like. Which is to say the information it did have is that costly new rules in the middle of an election campaign were politically verboten. Now that the election is over, the EPA suddenly knows enough to proceed.

ENLARGE

Gina McCarthy
Associated Press

The rule for existing sources, now under development, would work like this: Because coal and gas are combined in a single category, the EPA would cap an average rate of, say, 1,400 pounds of CO2 per megawatt-hour. In this hypothetical, that would allow a utility to run one coal plant and one gas plant—but the average would decline over time. As it fell, the utility would need to switch to more gas and retire coal. The standards for new plants explicitly refer to natural gas as a "system of emission reduction," when in fact it is a system of emission generation.

If the EPA adopts the proposals that such green groups as the Natural Resources Defense Council are lobbying for, utilities that phase out their coal operations early would generate credits they could sell to other operators to keep their coal plants running longer. If that sounds like cap and trade—well, yes, that's the point.

The White House is trying to fracture industry opposition and peel off companies that stand to profit—namely, the ones that have already switched to gas and could sell the credits to other utilities. It is also saying that carbon trading is more "flexible" than unit-by-unit command and control. This is Mr. Obama's version of Jack Benny's old "your money or your life" routine, except without the punch line.

The average rates could also vary from utility to utility or state to state, whatever is more useful for bribes or punishment. These new source performance standards for the existing electric portfolio might also be the only "executive action" that would mollify the environmental lobby if Mr. Obama does eventually approve the Keystone XL pipeline. The greens may not be able to stop the Canadians from extracting oil from the Alberta tar sands, but they would succeed in wiping out American coal-fired power.

Lately Mr. Obama has been going around saying that the problem is that he's a President, not an "emperor" or "dictator," but on carbon regulation this is a distinction without much difference. Ms. McCarthy has been integral in abusing laws that were written decades ago in order to achieve climate goals that Congress has rejected, all with little or no political debate. Someone should ask her about her antidemocratic politics at her confirmation hearings.

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